Comparison may be the thief of joy, but it’s almost impossible to stop comparing ourselves to our friends, family and, crucially, our colleagues. Behavioural psychologist John Stacy Adams saw that this posed a challenge in the workplace and used his research to develop a theory that explains how we perceive our inputs and outputs at work compared to the people we work with. Instead of focusing on money alone, Adams’ Equity Theory looks at compensation in relation to our social environment.
Adams was born in Brussels in 1925, and served in the US Navy during WWII. Later, he graduated from the Universities of Mississippi and North Carolina before working in both academia and with organisations including the US Army. In 1963 he introduced his Equity Theory of employee motivation to the world, addressing our tendency to compare ourselves with our peers. He explained that our sense of how we’re treated at work is shaped by our perception of colleagues’ rewards.
What is Adams’ Equity Theory?
There are two main principles to Adams’ Equity Theory. First, there needs to be a balance between our work inputs (effort) and outputs (reward). Second, workers need to feel fairly treated in comparison with their colleagues.
Inputs and outputs are straightforward: the input is the effort, knowledge, skills and commitment that an employee gives their organisation; the output is what they get in return, including remuneration and recognition. Equity Theory discusses the ratio between the two – does the reward add up?
The second element to consider is that employees compare their ratio with ‘referents’, colleagues with whom they feel they should have parity. If employees feel their own ratio isn’t well-balanced, they’ll look towards these referents and compare their rewards.
If an employee feels ‘under-rewarded’, their natural impulse is to restore their perception of equity. They can do this by reducing their input (putting in less effort), or by trying to increase their outputs, which often manifests as a pay rise request. Those who worry that they’ve been over-rewarded might start feeling uncomfortable and demotivated, or decide that minimal effort pays off. John Stacy Adams reminds us of the subjectivity of equity – and how we need to be aware of individual employee’s perceptions.
Applying Adams’ Equity Theory to employee engagement
Looking back over our series, Adams’ equity theory ties in closely with those of Maslow and Herzberg. However, Equity Theory takes a less straightforward and more fluid approach than previous models; the employee can be content with their situation one day, but feel defeated the next.
For example we might think that by giving the entire workforce the same bonus, we’re being fair. However, we can’t control how individuals perceive this bonus. Some may feel they worked harder than their colleagues but still reaped the same reward. Others may worry they didn’t actually deserve a bonus. What looks equal on paper isn’t always perceived as such in practice.
With this in mind, Huseman, Hatfield and Miles took the theory that one step further in 1987 with the ‘Equity Sensitivity Construct’. They broke down three groups of employees who respond to Equity in different ways:
Benevolents – those who are more tolerant of being under-rewarded
Equity Sensitives – those who desire a balance in outcome and input ratios
Entitleds – those who prefer their outcome and input ratios to exceed their colleagues’
Their research includes insights on how to analyse and best respond to each of these groups.
Understanding Adams’ Equity Theory as engagement ‘drivers’
So how can Adams’ Equity Theory drive our employee engagement and have a positive impact on morale?
Adams’ focus on fair outputs ties in closely with both our Reward and Recognition drivers. Simply put, if an employee feels like they’re doing great work, do they also feel like they’re being recognised for it? If staff receive constructive feedback, praise, and compensation (whether that’s through pay, promotion or training), input and dedication to the work will naturally shoot up. Our research also highlights a company culture that under-rewards employees is one of the main reasons why employees leave.
Equity Theory also highlights the importance of Management Support. When senior leaders are available to talk through any equity issues, employees will feel much more confident that their input and voice is heard. These issues might well be around pay structures, the system for increased reward, or perks like flexible hours – everyone has a different idea of what constitutes ‘reward’. And with that, John Stacy Adams reminds us that the best way to treat people equally is, paradoxically, to remember that we’re all different.
Also in this series: